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MTNL, BSNL merger on cards, says Mahajan

The government is considering merging Bharat Sanchar Nigam and Mahanagar Telephone Nigam Ltd prior to any proposal of divestment in either of the telecom PSUs, Union Communication Minister Pramod Mahajan said on Friday.

"I have asked the Department of Telecommunication to prepare a comprehensive plan to merge the two public sector undertakings and I hope the final decision will be taken soon," Mahajan said.

Mahajan said that division of MTNL and BSNL was "artificial" and not functional. "If I can sort out employees' issue amicably then I will merge the two immediately."

Even otherwise, Mahajan disfavoured further divestment in MTNL saying: "Let first VSNL's experience be completed."

Videsh Sanchar Nigam was privatised last fiscal and the government reduced its stake to 26 per cent.

MTNL is offering basic telecom services only in two circles of Delhi and Mumbai. Though both are major cities and lucrative markets, in an era of competition, the business of MTNL has reached a saturation level, Mahajan said adding: "I do not want MTNL's value and market share to go the way it happened in case of Maruti."

He, however, said that there was no proposal for divestment either in MTNL or BSNL with the ministry and added that if at all such proposal came it would be better to create an integrated telco first and then divest.

BSNL has a net worth of over Rs 60,000 crore (Rs 600 billion) and that of MTNL's is about Rs 7100 crore (Rs 71 billion). In MTNL, government has about 52 per cent stake and BSNL is 100 per cent owned by the government.

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